WASHINGTON D.C. - The awkwardly constructed Telecom Act of 1996 has led to unnecessary tension among federal, state and local regulators, but the digital revolution has paved the way for a new framework. So concludes the Federal-State Framework Working Group of The Progress & Freedom Foundation's Digital Age Communications Act (DACA). In a working draft paper and model legislation released today, the Working Group proposes a new charter for federal, state and local cooperation that seeks to maximize the expertise and advantages of each regulatory level while recognizing the inherent interstate, and international, nature of the Internet. The paper is being released for public feedback, and will be presented next week at the National Association of Regulatory Utilities Commissioners (NARUC) summer meeting.

"As a former Public Utilities Commission Chairman, I know firsthand the tensions between state and federal regulators," says PFF President Ray Gifford. "Participating in this working group, led by PFF Senior Fellow Kyle Dixon and University of Colorado Law Professor Phil Weiser , I saw firsthand valiant efforts to reach consensus in areas of longstanding conflict. The result, I believe, is a good first step toward ensuring fairness for communications providers, certainty for communications investors, and increased competition for consumers."

Policymakers too often focus on substantive questions at the expense of institutional mechanisms best appropriate to meet their goals, the Working Group concludes. The group set two conditions for what would be an appropriate mechanism. "First, the framework must decide the degree to which federal, state and local activity should derive from an integrated national scheme or, alternatively, from distinct schemes that govern each separate jurisdiction... Second, the framework must address, in a self-conscious manner, the scope of state and local authority with the respect to both the imposition of so-called 'social policy goals' as distinct from any potential economic regulation."

The hybrid strategy of the Telecom Act has failed these tests, and has led to legal uncertainty, tension between the different governmental authorities, and continuing litigation. The charter outlined in the Working Group draft paper would explicitly integrate federal and state authority. "Moreover," the Working Group states, "this charter would also make clear that the state agencies should be given greater solicitude on matters of social policy than on economic policy." The charter would also emphasize "flexibility and procedural mechanisms to promote transparent, expeditious and thoughtful policy decisions that would be made by the actor in the best institutional position to do so." The charter emerged after an examination of numerous models, ranging from a federal preemption regime to a "savings clause" approach that protects states and localities from federal interference.

"This is a very difficult topic," says Working Group Co-Chairman Kyle Dixon, "but as we move from this version to a final proposal, we will continue to work hard to develop an allocation of jurisdictional authority that is more consistent with today's market and technological conditions."

"Since the Telecommunications Act of 1996, the issues related to the division of federal-state authority have generated mostly heated arguments and not much enlightened discussion," says Working Group Co-Chairman Phil Weiser. "With the important leadership of PFF in spearheading the Digital Age Communications Act, our Working Group has endeavored to elevate the debate and assist Congress in addressing this issue in a thoughtful fashion." Weiser will head to Texas to present the paper to NARUC's Committee on Telecommunications July 27th, 8:30 a.m. CDT, at the 2005 NARUC Summer Conference at the Austin Hilton. A subsequent version of the report and proposed legislation will be presented and discussed at a conference hosted by the University of Colorado's Silicon Flatirons Telecommunications Program on Wednesday, October 26th.

Four other DACA Working Groups are developing proposals -- Regulatory Framework, Universal Service/Social Policy, Spectrum, and Institutional Reform -- and the work of all five when completed will be combined into a larger proposal, complete with model legislation. The Regulatory Framework Working Group released their first draft last month. The Universal Service/Social Policy Working Group hopes to release a draft proposal by mid-August.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.